Qualifying Recognised Overseas Pension Schemes (QROPS) update

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Guernsey's Income Tax Office (ITO) is working to protect existing Guernsey QROPS schemes as the UK's regulatory regime changes

HMRC's list of approved QROPS, to be published next on 12 April 2012, will only include a Guernsey scheme if the HMRC is satisfied that the scheme is 'residents-only'

This will not affect past transfers into schemes which were at the time QROPS, or the UK taxation of assets in such a scheme

HMRC to provide technical detail on occupational schemes at a later date

HMRC indicates that it will seek to revise its regulations further in order to disqualify 157E schemes from QROPS listings

On 6 December 2011, HM Revenue and Customs (HMRC) released a consultation document relating to draft legislation entitled The Overseas Pension Schemes (Miscellaneous Amendments) Regulations 2012 (the 'New Proposed Regulations'). The consultation set out proposed changes to the QROPS regime which would revise the conditions that a scheme has to meet to qualify as a QROPS, and it closed on 31 January 2012.

Since the date of the publication of the consultation and the draft regulations, Guernsey's Income Tax Office (ITO) has been in discussion with HMRC in order to try to find a way forward that would balance Guernsey's pensions industry's interests in relation to QROPS with the UK's stated policy objectives. However the HMRC has now indicated that it will seek to change its UK regulations again in order to prevent 157E schemes being recognised as QROPS, and the ITO is actively seeking further clarity from the HMRC on its position in that respect.

HMRC is also revising the QROPS list published on its website to reflect the changes to the QROPS regime. An updated version of the list will next be published on 12 April. Following a series of technical discussions, HMRC has confirmed to the ITO that the HMRC's revised list of approved QROPS will include only those Guernsey schemes that can satisfy the HMRC that they are 'residents-only'. This change will not affect past transfers into schemes which were at the time QROPS, or the UK taxation of assets in such a scheme.

Therefore the ITO is offering to assist local pensions schemes by being a conduit for clarifying to HMRC which Guernsey schemes can admit only Guernsey residents, and is advising providers to contact Guernsey's Director of Income Tax Rob Gray at rob.gray@tax.gov.gg.

Treasury and Resources Minister Deputy Charles Parkinson commented:

"I would encourage relevant 'residents-only' schemes to contact the ITO as soon as possible in order to stand the best chance of securing confirmation of their status on the HMRC's revised list. However, any that are received later will appear on the next update, as the list is published approximately every two weeks.

"We have asked the HMRC to clarify the process with regard to a smooth transition to the UK's new regulatory regime for s150 occupational schemes, and they have said they will come back to us as soon as possible. As soon as they do the ITO will inform GAPP and individual providers.

"We have also asked the HMRC to come back to us with clear and detailed information with regards to their position on 157E schemes. When we have that we will communicate it with our pensions industry immediately.

"While we are naturally disappointed that the UK has taken this action, we are relieved that pension schemes which have already been established in Guernsey will be largely unaffected, except in respect of any further transfers of assets from UK pension funds into those schemes. We are working to ensure that future transfers into schemes established for the benefit of Guernsey residents will not be affected by the change in the UK's stance."

Director of the Income Tax Office Rob Gray commented:

"Given the short time frame allowed by the HMRC, urgent action by schemes that cannot admit non-residents is required if they wish to remain as QROPS, and providers with questions in that respect should contact the ITO as soon as possible. In the first instance contact me atrob.gray@tax.gov.gg."